THE PALMATEER BLOG

There is no doubt that the US is a highly sought-after market for wine producers from around the world.

The main appeals are twofold: US wine consumers are open to trying wines from regions around the world; and these same consumers are willing to pay a premium for better-quality wine.

Much has been said about how difficult it is for wineries and wine regions to find importers that will embrace their products. Importers have many choices and are more risk adverse than ever. It is not uncommon for an importer to make a small commitment to a new brand and then rely on the producer to build the sales. If the brand doesn’t sell itself, the importer becomes less interested and moves on to the next brand opportunity.

In fact, this is such a common occurrence that there is a west coast retailer that sells in excess of $100 million annually of close-out wines that did not move in the marketplace.

One of the first and most difficult steps to maximizing your efforts when targeting the US is to connect with an importer that is best suited to your brand. This means the importer shares your vision for your brand and is open to helping you build your brand.

In the US, finding the right importer takes market expertise, industry knowledge, strong connections with market partners and time. Unfortunately, this task is daunting. Searching the Internet, sending out emails, cold calling companies or attending a trade tasting to connect with an importer usually only result in a loss of time and money.

Having spent over 30+ years each in sales and marketing for the wine industry, Chris Lynch and I have a comprehensive knowledge of key US importers. Based on our experience, we are able to profile potential importers to understand their portfolio strategies and gauge their interest in your brand. We also have strong relationships with decision-makers and a large network that gets us a response. As the president of Palmateer Consulting, I have led several searches for wineries and wine regions in which suitable importers were identified and secured, thus enabling my clients to successfully launch their brand(s) in the US.

Palmateer Consulting has the experience, know-how and network to help wineries and wine regions successfully connect with importers. If you are looking for a US importer that will grow your brand, then please contact us to discuss.

As you know, hiring the right sales manager for your winery is essential to building your brand in today’s market. Here are three paths to lead you to the best suited candidate.

Retain a recruiting firm. This approach is perfect if you are busy, believe in leaving recruiting to the experts, and cost is not an issue.

Pros: For wineries who can afford to retain a recruiting firm, I wholeheartedly recommend this route. These firms keep current on best practices, maintain a large database, and can help you secure the right candidate in 2-3 months. I have had successful relationships with executives Chet Hutchison, Dawn Bardessono, and Amy Gardner.

Cons: Can be expensive, costing up to 30% of the new hire’s first year compensation.

Do-It-Yourself (DIY) recruiting. The DIY approach (asking colleagues for referrals, promoting internally, posting on a job search website) is good if you have limited money and a strong network.

Pros: You are in control and the monetary cost is low.

Cons: Sample size, perspective, and time. Likely, your network will help identify a dozen or so candidates. It is hard to find the best candidate in this small of a pool. Plus, you must be wary of a conflict of interest, e.g., a distributor’s recommendation may be good for them and not as good for you. If you promote internally, expect 1 to 2 years before anyone without established buyer relationships to earn their trust. And, while the monetary cost of DIY recruiting is low, you will spend more time finding that perfect candidate. We all know, time is money.

Choose a happy medium. Palmateer Consulting offers a hybrid service between hiring a recruiting firm and DIY. This path is great if you want an experienced professional to help you secure the best suited candidate at a fraction of the cost of recruiting firms.

Pros:

Palmateer Consulting is structured differently than a single-focused recruiting firm. This allows us to help wineries find the right new hire at a much lower cost.

Gordon Palmateer has extensive recruiting experience and walks with clients hand-in-hand through each step of the 2-3 month process. Throughout his 35 year career he has successfully recruited and hired hundreds of wine industry professionals. He has a strong network to tap into and maintains a list of possible candidates within the wine industry.

Having worked for Importers, wineries, and distributors, Palmateer uses his unique perspective and strong network to help his clients evaluate their sales needs and find the right fit candidates.

As a third party, it is easier for Palmateer to maintain objectivity to find the right candidate to fit your company, your needs, and to help build brands in the market.

Please reach out to us at Gordon@palmateerwinegroup.com if you have recruiting needs. We look forward to hearing from you and helping you find your next new hire.

The Problem: Success = A+ B

It’s that time of year when wineries are scrambling to solidify new agreements with existing and new distributors and trade accounts (buyers). In today’s hyper-competitive market, this can be challenging.

The situation can be especially daunting for small to medium-sized brands (< 50,000 cases) that don’t have 95+ scoring wines or the muscle to force their way into the distribution market. Today’s overloaded buyers are seeking brands that have a track record of success and sell with minimal effort or risk. Too often, smaller wineries struggle to penetrate the distribution market or rely on selling the majority of their product direct to consumer.

Breaking Down the Formula for Success

What to do? If you are a small to medium-sized producer, here is the formula for successfully securing distribution and trade partnerships in this saturated market:

Success = high-quality, authentic product + realistic pricing + modest expectation and production in the short run + current vintages + commitment + patience + A STRONG AND BROAD NETWORK

High-quality, authentic product: If you are taking a new wine to a buyer that already sells similar brands, chances are slim that they will add you to their portfolio solely based on the quality of your product. In addition to having a high-quality product, you must also have a unique story and demonstrate authenticity.

Realistic pricing:Even if your wine is worth the retail price of $35 and is priced with parity to similar mature brands, in our post-recession world, buyers will be shy of taking on your wines unless you have very strong accolades and selling propositions. Often, this takes time. I highly recommend getting reliable, expert feedback on your pricing strategy to position your brand to grow successfully. (Look for a future blog on pricing.)

Modest expectation and production in the short run:Take the long view to building your brand and ramping up production. Start with a modest production forecast or chances are you are going to be calling “Larry the Liquidator” to sell a surplus of wine at distressed prices.

Current vintages: The argument that wine sells better with more bottle aging does not work in the U.S. distribution and trade market. What buyers hear is “I have an older vintage and I am ready to sell it at a low price.” Sell your mature wine directly to consumers; get your current vintage to distributors.

Commitment: If you are reading this, then you know selling wine requires a bigger commitment than a romantic weekend hobby. Buyers are looking for partners who will sell wines in the trenches with them.

Patience: Plan on 1.5 to 2 years of strategic sales and marketing before you know if buyers will support and be loyal to your brand. At that point, you can start the process of planning your production forecast with a level of confidence.

A STRONG AND BROAD NETWORK: Even with all of the above in place, there is still a high level of competition at every price point with every varietal. Often, it comes down to who you know and being at the right place at the right time. Leveraging your network or finding a company that has time for your brand as well as a strong network will help you succeed over time.

Gordon Palmateer is an expert sales and distribution strategy for domestic and imported wines brands in the US and president of Palmateer Wine Group. Email him at info@palmateerwinegroup.com for more information on this topic.

Why FOB ≠ Retail x 50%

Based on numerous conversations I have had with wine producers who are struggling to penetrate the distribution market, I have come to believe that there is someone out there spreading the fallacy that in the distribution market, a product’s FOB = winery retail x 50%.

The short explanation as to why this is untrue is that cost and margin have gone up throughout the selling channel. Plus (and this is a big one) post-recession level of competition has created opportunities for distributor and retailer margin enhancement.

Let’s take a real life scenario.

Your winery retail is $40, so you were told by a trusted long-time industry veteran that the product’s FOB should be $20.

In the table, that bottle of wine that used to retail for less than $40 is now retailing for $43. This model is only an example and there are many variables that differ from market to market and from buyer to buyer.

So, if a winery employs the philosophy of FOB = retail x 50%, it will be essentially undercutting those distributors and retailers that he is asking to sell and support the wine. If a winery wants to be successful in the distribution market, I would not recommend undercutting your trade customer. Remember, in today’s market, the internet tells all and your price is public knowledge.

Gordon Palmateer is an expert sales and distribution strategy for domestic and imported wines brands in the US and president of Palmateer Wine Group. Email him at info@palmateerwinegroup.com for more information on this topic.